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BUSINESS IN BRIEF 8/7

 HSBC: Manufacturing drives H1 GDP growth; Cashew exporters seek SBV help; VPBank gets nod to acquire finance firm; Kinh Do to venture into coffee and cooking oil markets; VietinBank to sell VND1.5-trillion of bad debt to VAMC

HSBC: Manufacturing drives H1 GDP growth

HSBC Bank in a data reactions report said that manufacturing is the key supporting factor for Vietnam’s gross domestic product (GDP) to grow 5.18% in the first half of this year.

In the report released last Friday, the bank explained that Vietnam is an export-oriented economy, with exports accounting for 77% of GDP in 2013 and likely rising to 80% in 2014. Despite sluggish global demand, outbound sales have expanded by double digits and this trend is projected to continue in the next two years.

In June, exports grew 14.9% from the beginning of this year but were lower than the 15.4% in May, and this reflected temporary disruptions. With activity normalizing and external demand picking up in the second half, exports should bounce back and accelerate in the coming months.

The economy has weathered a slowdown in domestic demand relatively well due to stellar export performance. In the second quarter, manufacturing output rose 9.1% year-on-year and from 6.5% in the first quarter.

“We expect the sector to continue to expand thanks to increased investment, trade

agreements such as the EU-Vietnam Free Trade Agreement (FTA) which might be concluded in end-2014, and better external demand. Manufacturing continues to increase its contribution to growth,” the report said.

However, in the next two years, HSBC said, its base case scenario shows growth will still be significantly below trend. The sluggish pace of public investment, and banking sector and State-owned enterprise (SOE) reforms is impacting consumer confidence.

In addition, a still largely unresolved bad debt issue will keep household and corporate purse strings tight. As of May, credit only grew by 1.3%.

“We expect credit growth to accelerate in the second half, boosting domestic demand marginally. Inflation will also accelerate early in the third quarter on higher service costs and improving domestic demand but will likely settle between 5-6% by year end. The central bank, thus, will comfortably keep the open market operations (OMO) rate at 5% for the rest of the year,” the bank added.

While growth will be sluggish in a short term, Vietnam can come back in a big way in a medium term. Initiatives such as the EU-Vietnam FTA and Trans Pacific Partnership (TPP) will further remove external trade barriers and boost Vietnam manufacturing competitiveness globally.

The report also pointed out that the Government is slowly removing internal trade barriers, with infrastructure investment more targeted to facilitate trade and domestic retail flows. What remains is the regulatory framework for public, SOE, and banking sector reforms and its enforcement.

According to the report, reforms are proceeding with a two-step forward and one step backward approach, reflecting the Government’s indecision about the role of the state sector in an increasingly globally-integrated economy.

Council set up to link businesses and families

The Vietnam Entrepreneur and Family Council came into existence last week on the occasion of the Vietnamese Family Day.

Pham Dinh Doan, chairman of Hanoi-based Phu Thai Group, was voted interim chairman of the council whose initial founding members are around 20 family-run businesses.

Doan told the inauguration ceremony in the northern city of Halong that the council targets to attract 100 most prestigious family-run companies in Vietnam in the first five years of operations.

The council will serve as a bridge for business families to connect outstanding business families and hold events for them to share experiences and information as well as support one another.

Vietnam Chamber of Commerce and Industry chairman Vu Tien Loc said Vietnamese entrepreneurs have become more pessimistic than before after years of difficulties and now is the time to help lift up the spirit of the local business community.

“The council is expected to breathe new life into the business community and inspire the entrepreneurship of new generations,” Loc said.

Dollar loans surge 10 per cent in first half of 2014

Credit growth in foreign currencies increased by 10 per cent in the first half of this year stirring both confidence and doubts about the foreign liquidity of the banking system.

The 10 per cent growth of dollar loans is likely to be significant, especially when the overall credit growth in six months was an estimated 2.3 per cent.

Le Xuan Nghia, member of the National Financial Supervisory Council, quoted by baodautu.vn website, saw this surge as a good sign.

"The statistics indicate that the status of foreign liquidity at banks is worry-free," Nghia said.

"Banks may see they don't necessarily stock foreign currencies that might lose its appeal. They can purchase it if required," he added.

The State Bank of Viet Nam reports showed that borrowing costs of dollar loans were 3 to 4 percentage points lower than of dong loans, which is blamed for the recent steady increase.

Annual interest rates charged over privileged loans hover around 7 to 8 per cent. For manufacturing sectors, the rates are 9 to 10 per cent for short terms and 10.5 to 12 per cent for mid and long terms per year. For dollar loans, popular lending rates are 3 to 7 per cent annually.

Director of a HCM City-based export company deposited Vietnamese dong to get 6 to 7 per cent saving interest then used the deposit paper as collateral to borrow dollar loans at 4 to 5 per cent interest rates at banks.

Regarding the big gap between the rates of dong and dollar, industry experts said that the increasing favour of dollar loans was understandable.

Huynh Buu Son, an independent expert, cited by thanhnien.com.vn, saw risks in banks' liquidity of foreign currencies as the ratio of lending over deposit reached 99.5 per cent.

He said that banks needed to have a provision fund to secure their foreign liquidity if depositors withdrew money.

It should be noted that the State Bank is not equipped to offer support to banks which run into problems with foreign currency liquidity.

In May, the State Bank admitted to high risks when businesses continued to prefer foreign currency loans.

Economists have urged the central bank to cut the dong interest rate further, in order to ease the capital cost burden on businesses. The central bank said it would take time to consider the issue thoroughly for the sake of the dong position in the long run.

Pham Xuan Hoe, deputy head of the central bank's Monetary Policy Department said that as of June 25, the total supply of the system increased by 6 per cent. Roughly 87 to 90 per cent of capital sources at banks flew into Government bonds and State Treasury bills.

Hoe said that a large amount of money should be directed into the market to support economic recovery instead.

Cashew exporters seek SBV help

The Viet Nam Cashew Association (Vinacas) has asked the State Bank of Viet Nam for more supportive policies that focus on commercial banks lowering interest rates and easing lending regulations.

The State should also provide the enterprises with additional financial assistance to facilitate further investment in improving processing capacities. This would ensure production of high value-added products, Vinacas Vice Chairman Dang Hoang Giang told radio The Voice of Viet Nam (VOV).

Giang said that Viet Nam had retained its position as the world's largest cashew nut exporters since 2006.

However, the industry was currently operating at 50 per cent of its capacity, he said, adding that low value adds, small scale of production, and capital shortage due to difficulties in accessing bank loans remained its major obstacles.

During a recent conference in southern Ba Ria – Vung Tau province, trade experts said that if cashew processors did not pay attention to improving the qualitative competitiveness of their products and processing capacities, they would be under severe pressure.

Quality products would make it easier for businesses to enter demanding markets and get higher profits, they said.

Up to 130,000 tonnes of cashew nuts were shipped abroad during the first half of this year, bringing the country an export turnover of US$830 million.

The association predicted that the industry was likely to realise a turnover of $2.2 billion this year from exporting 180,000 tonnes of cashew nuts and shipments of nut shell oil and other processed products.

There are roughly 300 Vietnamese firms involved in exporting cashew nuts to 100 countries and territories worldwide.

Among them, the US, China and Netherlands are the three largest importers of Viet Nam's cashew, making up 28.5 per cent, 20.01 per cent and 9.1 per cent, respectively, of Viet Nam's total export value.

Experts discuss equitisation efforts

Social resources should be included in the equitisation of State-owned enterprises (SOEs) to pave the way for people to take control of the economy, said experts at a workshop here.

If so, stages of equitisation such as appraisal, charter capital structure, shareholder issue, apparatus and human resources will change for the better, which in turn, would bring more benefits to workers, investors and the economy as a whole, they said at the workshop on June 30.

Equitisation forms part of the ongoing economic restructuring scheme, since a number of SOEs ran ineffectively, incurring huge losses in 2012 due to their scattered investments.

It is advisable to examine the performance of the SOEs' business areas and ensure they continue running productive units only, said Deputy Director of the Ho Chi Minh National Academy of Politics and Public Administration, Associate Professor Le Quoc Ly.

Under its decree issued in May, 2014, the government will, from July 10, monitor, examine and inspect SOEs with regard to the observance of law and decisions taken by their owners. The move is expected to help owners and State management agencies see a full and clear picture of operations of SOEs.

Nguyen Thi My Dung, from the University of Finance-Marketing, warned of challenges ahead during the 2014-15 equitisation plan and added that thorough preparations are vital to the process.

VPBank gets nod to acquire finance firm

The State Bank of Viet Nam (SBV) on Monday allowed the Viet Nam Prosperity Bank, or VPBank, to acquire the Vinacomin Finance Company.

The seller is the Viet Nam National Coal and Minerals Industries Group, or Vinacomin, which will transfer its entire equity at the finance company to the bank.

SBV Decision No 1282/QD-NHNN, dated June 30 and taking effect on the same day, states that the bank will inherit all rights, responsibilities and legal interests of the group here.

According to a new business licence granted by SBV Governor Nguyen Van Binh, the finance firm has a charter capital of VND1 trillion, or US$47.62 million, and its name is changed to VPBank Finance Company.

Its operations vary from receiving deposits and borrowing money, issuing and trading valuable documents, contributing capital and buying stakes, to providing foreign exchange services and granting consumer credits.

It can also deal in insurance and consultancy services in banking and investment areas.

The Government had, in principle, approved the equity sales of Vinacomin in May with the aim of implementing the divestment of State-owned enterprises from non-core lines of business, and restructuring the credit institution system.

VPBank said it would shift all consumer credit activities to the acquired company for better operations, as it planned to be among the top retail banks in Viet Nam in the future.

Ca Mau sees positive economic growth

The southernmost province of Ca Mau saw significant economic growth in the first half of 2014, exceeding its targets in several areas.

Aquatic product yield recorded a year-on-year rise of 15 percent, reaching 200,000 tonnes, while exports earned nearly US$500 million, according to the chairman of the provincial People's Committee, Pham Thanh Tuoi.

Industrial production hit nearly VND7 trillion ($329 million), 21 percent higher than the target.

The locality aimed to reach an aquatic product yield of 420,000 tonnes, a farm produce output of 550,000 tonnes, and an export value of $1.1 billion this year.

Central city to design shopping centres

The central city plans to build a major downtown shopping centre next month, vice chairman of the city people's committee Phung Tan Viet said.

Six main streets will house stores selling fashion and electronics as well as souvenirs and cuisine from Da Nang and nearby destinations Hue, Hoi An and My Son.

The VND20 billion (US$950,000) shopping centre will cover a wide area, including the bank of the Han River.

The city will construct five shopping buildings and performance spaces next year, including Golden Mart, Meriden Far East and Nguyen Kim Trading and Apartment complex.

Italy, VN hold seminar on leather trends

A seminar on leather trends for the fashion, furniture and automotive industry will be held on July 11 to promote trade between Italy and Viet Nam in the leather industry.

The event is organised by the Italian Chamber of Commerce in Viet Nam in collaboration with the Special Agency of the Milan Chamber of Commerce; the International Leather Fair System – Lineapelle; and Unic – the National Union of the Tanning Industry, leather tanning, Milan, Italy.

It is supported by Viet Nam Trade Promotion Agency and the HCM City Shoes and Leather Association.

Dong Nai sees 15.8 percent rise in exports

The southern province of Dong Nai earned 6.053 billion USD from exports in the first half of this year, a 15.8 percent rise year-on-year, fulfilling 50.8 percent of its yearly target.

Of the total, the foreign-invested sector contributed 5.112 billion USD, up 17.5 percent over the same period last year.

Bo Ngoc Thu, head of the provincial Department of Planning and Investment, attributed the results to the stable production by foreign invested enterprises, including many newly-established ones which were kept busy with orders.

At the same time, the province also worked hard to ease difficulties for local firms in terms of market and capital, while joining many trade promotion events abroad, especially in Dubai , he said.

Particularly, good signs were seen in the export of agricultural products. According to the Dong Nai Statistics Office, the province shipped abroad nearly 130,000 tonnes of coffee for 276 million USD in the six months, up 33 percent in volume and 30.3 percent in value.

Meanwhile, it also earned 70 million USD from exporting about 11,000 tonnes cashew nut, a rise of 12.6 percent in volume.

Local agricultural firms held that the export of farm produce enjoyed favourable conditions in both output and price, together with rising demand from a number of markets, especially those in Africa and Middle East .

In order to reach the target of 12 billion USD in exports for this year, Dong Nai will help local enterprises expand their market by connecting them with foreign importers and sending them to trade and investment promotions and trade fairs abroad, including those in Germany, Myanmar, the Republic of Korea and Japan, said Thu.-

Technology nursery for Mekong Delta city to operate soon

Leaders from the Mekong Delta city of Can Tho on July 1 worked with officials from the Republic of Korea to speed up the implementation of a technology nursery which is expected to be operational by 2015 in the city.

The construction of the 21-million-USD project was kickstarted in November last year at the Tra Noc industrial park with an area of 12,000 square meters.

It aims to build a research and development centre for farm produce and seafood processing and mechanical enginerering industries.

This will not only help the region promote its agriculture advantage but also support farmers to access advanced technology for high-quality products.

Managing director of the project Kim Hee Sup said the RoK will set up a Mekong Delta research institute in the country to promote exchanges between experts and students of the two sides.

Vice Chairman of the Can Tho People’s Committee Truong Quang Hoai Nam said the city welcomes and will give full legal support for Korean businesses to register for operation there.

Kinh Do to venture into coffee and cooking oil markets

Confectionery maker Kinh Do Corporation on June 30 unveiled plans to invest in Vietnam Vegetable Oils Industry Corporation (Vocarimex) and PhinDeli Joint Stock Company, further diversifying its business operations.

Its foray into the cooking oil and coffee markets marks yet another move in its business diversification strategy. Earlier, the company announced its partnership with Taiwan’s Saigon Ve Wong Co., Ltd to produce instant noodles.

At the firm’s annual general meeting in HCMC on June 30, Kinh Do’s shareholders approved the plans to invest in Vocarimex and Phin Deli as well as the deal with Saigon Vewong.

Kinh Do did not unveil how much it would invest in Vocarimex but the latter said as a strategic shareholder Kinh Do would hold a 24% stake. In addition, securities firm VPBS will own an 8% stake at Vocarimex.

Vocarimex looks set to launch an initial public offering (IPO) on July 25 with the share price starting from VND11,300 per share. With this price, Kinh Do is expected to spend more than VND330 billion owning 24% of Vocarimex.

In March this year, Prime Minister Nguyen Tan Dung signed Decision 446/QD-TTg approving the equitization plan of Vocarimex with chartered capital of VND1.218 trillion equivalent to 121.8 million shares (VND10,000 per share). Accordingly, the State would own 36% of the firm, strategic investors 32%, and employees and outsiders the rest.  

As leader of the domestic confectionery market, Kinh Do said the sector now offers little room for expansion and in the last three years, the company has made efforts to find opportunities to invest in the sectors of foods and essential products to expand business.

The country’s cooking oil market size is now estimated at some VND22.3 trillion, or over US$1 billion, with annual growth of 7-9%, while the respective figures for the instant coffee market are VND4.75 trillion and 15-20%, said Tran Quoc Viet, deputy general director of Kinh Do.

Viet said the firm has signed an agreement to become a strategic shareholder of Vocarimex, but he did not reveal the stake it has acquired from the edible oil maker or when the joint scheme will start production.

Vocarimex is now a major cooking oil producer in the domestic market with two popular cooking oil brands, Tuong An and Nakydaco. It also owns stakes in Cai Lan Oils and Fats Industries Co. Ltd, owner of Neptune and Simply cooking oil products, and Golden Hope Nha Be Co., owner of Marvela cooking oil.

Kinh Do did not say when it will have the first coffee product either but revealed that it will hold a majority stake in the deal with Phin Deli.

The confectionery producer last month said it would partner with Saigon Ve Wong to produce instant noodles and spices in the third quarter of this year.

In their joint-venture, Saigon Ve Wong will produce instant noodles, rice porridge and pho (Vietnamese noodle soup) for Kinh Do while Kinh Do will distribute spices of the Taiwan firm in the domestic market.

The Kinh Do leader said the corporation saw abundant opportunities in the domestic instant noodle market whose size is now estimated at more than VND22.34 trillion per year.

However, Kinh Do still sees confectionery manufacturing as its core business and continues expanding the business with a focus on export.

At the meeting, its shareholders also agreed on this year’s revenue target of VND5.15 trillion and pre-tax profit of VND660 billion, rising 13% and 6.6% respectively over last year’s figure. The company expects to offer its shareholders a dividend of 20% in cash.

Ford Vietnam churns out first EcoSport

Ford Vietnam last week  started rolling out its all-new EcoSport urban SUV at the company’s Hai Duong assembly plant.

Ford Vietnam is the fifth plant in the world to construct the vehicle, joining India, China, Brazil, and Thailand, reinforcing the strategic role of Vietnam in the region.

“The all-new EcoSport is the next proof point of our ongoing product-led transformation and aggressive growth plan for Vietnam,” said Jesus Metelo Arias, Ford Vietnam’s managing director. “Designed to break through the boundaries of today’s compact car and SUV segment, the all new EcoSport sets a completely new standard for design, technology and value for money.”

Built on Ford’s global B-segment chassis, the EcoSport is an alternative to a compact car with room for five adults and storage, but also versatility and smart connectivity that will appeal to lifestyle customers who are independent and love exploring the world around them. The all-new EcoSport’s high driving position, rugged capability, superior fuel economy and convenient features make it just the right vehicle for both city streets and mountain roads.

Powered by Ford’s global 1.5-litre Ti-VCT engine mated to Ford’s six-speed automatic transmission or five-speed manual, the EcoSport will be available at Ford showrooms nationwide starting in July.

Two weeks ago Ford Vietnam announced a record performance for May with overall retail sales rising 51 per cent against last May’s 932 units. This month was also the best-ever sales month for the Transit model, and also saw continued high demand for both the Ranger and Fiesta nameplates.

“We’re continuing to make significant progress on our One Ford plan, as strong sales across our lineup reflect the widening consumer appeal of the Ford brand in Vietnam for our segment-leading vehicles,” said Arias.

Ford also maintained its lead in the pickup truck segment in May, as the Ranger delivered retail sales that increased 130 per cent to 308 units. So far this year, total sales of the Ranger have jumped 164 per cent to 1,348 units.

VietinBank to sell VND1.5-trillion of bad debt to VAMC

Vietnam Bank for Industry and Trade, or VietinBank, is going to sell around VND1.5 trillion worth of bad debt to Vietnam Asset Management Company (VAMC), said a source from VAMC.

VietinBank is the last among the four State-owned banks to sell debt to VAMC. The other three are Agribank, BIDV and Vietcombank.

Pham Huy Hung, who used to serve as a leader at VietinBank for over 25 years, once said that VietinBank had no plans to sell bad debt as it would settle it on its own. The situation has been different after Hung’s retirement.

Le Duc Tho, new general director of the bank, recently told the Daily that selling debt to VAMC is a good move. As the economic slump is not over this year, the bank is taking a range of measures, including selling some debts and tackling others by itself.

VietinBank has seen major negative changes in financial indicators. According to its consolidated financial report in the first quarter, VietinBank’s total assets as of March 31 dropped 3% against late 2013 to nearly VND559 trillion. Its bad debt ratio stood at 1.78% compared to 1% at the end of 2013.

The figures were surprising as VietinBank had always maintained better asset and debt ratios than the other State-owned banks for years.

Explaining the changes, Tho said VietinBank has restructured total assets to suit the current market and business situations.

VietinBank at its 2014 annual general meeting in April for the first time set a lower profit target than in the previous year. The bank aims to obtain nearly VND7.3 trillion in pre-tax profit, down 6.1%, with credit and mobilization growing 13% and 12% respectively.

This year, VietinBank’s total assets are expected to rise 11%.

In the first six months of this year, VAMC bought over VND6 trillion worth of original debt from credit institutions, taking to nearly VND48 trillion the total bad debt value it has purchased so far.

VAMC has bought around VND1.9 trillion from BIDV and over VND1 trillion from Vietcombank.

One-member State firms told to observe disclosure rules

One member State-owned limited companies in Vietnam will have to respect disclosure rules from August 5 this year as stipulated in a newly-issued decision of Prime Minister Nguyen Tan Dung.

According to Decision 36/2014/QD-TTg, the companies will have to publicize its business reports in Vietnamese, including financial statements every six months, long-term development strategies, annual production and investment plans, restructuring schemes and results.

In addition, the companies will publicize corporate evaluation results, payrolls and bonuses. They are also required to post information on their websites within five working days after contents of the reports are approved.

The information should be announced by a legal representative or a person assigned to conduct information disclosure. The persons must bear responsibility for the accuracy of the information they disclose.

Agencies related to the information will also have to publish the reports on their websites within five working days. The Ministry of Planning and Investment will post the information on the business portal at www.business.gov.vn.

The rules requiring announcement of wages and bonuses for leaders such as board members, controllers, CEOs and chief accountants might draw objections from the enterprises.

The information disclosure rules will not affect one member firms under the Ministry of Defense, the Ministry of Public Security and those in the banking system. These companies will be governed by specific regulations.

VPBank acquires Vinacomin finance firm

The State Bank of Vietnam has signed a decision allowing Vietnam Prosperity Bank (VPBank) to acquire Vietnam National Coal - Mineral Finance Company (CMF).

VPBank will have responsibility to take over all assets, rights and obligations of the finance firm. Within 15 working days after the decision takes effect, VPBank will have to complete procedures to change all licenses of the finance firm under current laws and regulations.

With total registered capital of VND1 trillion, CMF will be renamed as VPBank Finance Company Limited after being acquired by the unlisted lender.

Early last month, the Government has given ‘in principle’ approval to Vietnam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin) to sell all its chartered capital at CMF to VPBank.

Viet Capital Securities Company (VCSC) in a recent daily report said this move is part of the bank’s plan to become a leading retail bank in Vietnam by 2017.

VPBank also is seeking foreign strategic partners, with a maximum share sale planned at 30% of its registered capital, after Singapore-based Oversea-Chinese Banking Corporation (OCBC) sold their stake in VPBank in 2013, VCSC said.

Long Bien opens VND1.5-trillion golf course in Hanoi

Long Bien Investment Company has inaugurated a golf course costing around VND1.5 trillion (US$70.5 million) in Long Bien District, Hanoi.

The 119-hectare golf course incorporates 27 holes, a club house, a 1.52-hectare golf driving range, a restaurant for more than 1,500 guests at a time, and lakes.

The golf course, designed by Nelson & Haworth, is also a venue for seminars and fashion shows, among others.

 Japan firms want better access to information about Vietnam

One of major difficulties Japanese enterprises are facing when mulling investment in Vietnam is a lack of market information, they said at a conference held in HCMC last week.

Japanese enterprises told the meeting held by the Japan External Trade Organization (JETRO) to discuss the food industry with local authorities that they had trouble finding information about the country’s market as a whole and specific data in each locality to do research before making an investment decision.

Yasuzumi Hirotaka, managing director of JETRO in HCMC, said the organization has also found it difficult to help Japanese firms search for information about Vietnam.

“It is hard for us to tell enterprises we don’t have the data they need, because that will disappoint them. Enterprises, especially those specializing in food processing and agriculture, need to know much more about the market. Complete and accurate information helps them learn about the market demand so that they can expand their businesses,” he said, adding that enterprises have to cover the expenses used to survey the market.

Private market research companies, meanwhile, are not reliable as they do not have accurate data about the market, a representative of a firm said.

Apart from insufficient information, Japanese investors also had other concerns, said Hirotaka.

So far six enterprises that have consulted JETRO said they wanted to invest in Vietnam’s agriculture sector and had interest in the Mekong Delta but still hesitated due to difficult traffic conditions in the region, he said.

Meanwhile, enterprises that already made investments in Vietnam said they were having a hard time dealing with law enforcement authorities, who require them to observe those rules not stated by law.

A representative of a company said while Decree 94/2012 of Vietnam does not prohibit foreign enterprises from distributing wines in the domestic market, the company could not get a license to distribute wines as authorities said they do not grant such a certificate for foreign investors.  This company had already obtained an investment certificate to run its food and beverage business and to import wines for the local market, but was barred from distribution, the source said.

In response, Le Thi ThanhThuy, an official from the Domestic Market Department under the Ministry of Industry and Trade, said the ministry does not discriminate between foreign and domestic firms when granting a license as it goes against Decree 94.

Rice prices surge as export turns active

Prices of rice in the domestic market have recovered as exporters have boosted their purchases thanks to positive signs of export markets in the third quarter.

Low-grade IR 50404 paddy (unhusked rice) in the Mekong Delta province of Dong Thap now sells for VND4,200-4,250 per kilo, rising VND200 against last week, while IR 50404 rice is priced at VND6,600-6,650 per kilo, surging VND250, said Duong Van Men, a rice dealer in the province’s Lap Vo District.

Ngo Ngoc Yen, director of HCMC-based rice trading firm Yen Ngoc, said prices of IR 50404 rice are now around 6,600-6,700 per kilo while high-grade rice is priced at VND7,700-7,800 per kilo at Ba Dac wholesale market in Cai Be District of Tien Giang Province in the delta.

“Summer-autumn rice has yet to enter its harvest season and due to rainy weather, supply has been dwindling while the demand among food traders has increased, leading to the price hike in the domestic market,” she explained.

Lam Anh Tuan, director of Thinh Phat Co. Ltd. in Ben Tre Province, said rice prices will continue rising in the coming days but may not soar strongly as supply will be more abundant when the summer-autumn harvest season comes.

Last week, Vietnam Southern Food Corporation (Vinafood 2) won a contract to export 200,000 tons of 5% broken rice to Malaysia at a free-on-board (FOB) price of US$410 per ton.

Recently, local media said the Philippines has decided to buy an additional 200,000 tons of rice after signing contracts to import 800,000 tons of rice from Vietnam on April 15.

Tuan of Thinh Phat Co. Ltd., a member of the Vietnam Food Association (VFA), said the association has not received any official confirmation about the fresh deal of the Philippines, but it is a strong possibility that the country will choose to import Vietnamese rice.

“Asian countries are now being affected by climate change, with their output slipping. On the other hand, Thailand is temporarily halting its rice export to inspect its stockpiles. Therefore, rice importers will switch to Vietnamese rice which has good quality and reasonable prices,” he said.

In the year to date, the country has signed government-to-government contracts to export 1.2 million tons of rice compared to 700,000 tons in all of last year, not to mention the Philippines’ unconfirmed imports of 200,000 tons. In addition, Indonesia, Sri Lanka and Bangladesh now also plan to import rice from Vietnam, he said and predicted that the amount of rice exported through such contracts this year will not be lower than 1.5 million tons.

According to some enterprises, rice export in the third quarter may also pick up as dealers will boost their small-volume shipments through border gates to China.

Vietnamese 5% broken rice is now quoted at US$405-415 per ton and 25% broken rice at US$355-365 per tons, while jasmine rice is exported at US$575-585 per ton on global markets, increasing by an average US$10 per ton compared to early this month.

In the year to June 20, member enterprises of VFA had exported nearly 2.9 million tons of rice worth more than US$1.3 billion (FOB).

AIA Vietnam won Trusted Brand 2014 award

Life insurer AIA Vietnam just received the title Vietnam Trusted Brand 2014.  

This award is based on result from the reliable product and service survey by the Vietnam Standards and Consumer Protection Association in cooperation with Consumer Newspaper.

This is the third consecutive year AIA Vietnam has received this prestigious award.

Vietnam Trusted Brand award seeks to honor and reward businesses providing qualified products and excellent services to consumers.

The programme helps identify and promote products and services of good quality to serve local consumers.

Via the programme, businesses have a chance to bolster reputation as well as their corporate responsibility towards consumers.

AIA Vietnam’s chief executive officer Stephen Clark said “Being the most preferred life insurer in Vietnam is our ultimate goal. We look to become the first choice of our customers, agents, staff as well as partners whenever they need advice on financial solutions.”

“AIA Vietnam receiving certificates of Merit from the Ministry of Finance and Golden Dragon awards for eight consecutive years and now the Vietnam Trusted Brand 2014 will surly be a great motivation for us to continue strongly focusing on the essential elements such as diversified portfolio of good products, excellent customer services and professional premier agency,” he asserted.

Experts concerned about heavier reliance on China

Experts have cast doubt on a swift exit of Vietnam from deep-rooted reliance on the Chinese economy, saying Chinese contractors have won contracts for a majority of big-ticket projects in key industries.

Speaking at a seminar on economic autonomy in an interdependent world in Hanoi yesterday, economist Le Dang Doanh said Vietnam had awarded so many engineering, procurement and construction (EPC) contracts to Chinese firms.

Chinese firms are now involved in 23 of 24 cement projects, 15 of 20 coal-fired thermal power generation projects, and other large road, bauxite mining and processing, and forest development projects.

Doanh asked, “Why has Vietnam awarded a lot of contracts to Chinese contractors? How much will the country benefit from these deals? Who will profiteer from this?”

Chinese firms are considered masters of bribe giving, he noted, asking whether Vietnam’s heavy dependence on China has resulted from group interests.

Chinese companies have won contracts at most large projects such as Formosa steel project in Vung Ang, Ha Tinh Province.

Customs statistics show Vietnam’s imports from China hit US$28.8 billion in 2012 while China said its exports to Vietnam reached US$34 billion. This indicates US$5.2 billion worth of goods was exported to Vietnam via border trade, he added.

Nguyen Van Thu, chairman of the Vietnam Mechanical Engineering Association, said that Chinese companies are EPC contractors at five of six chemicals projects, all the two mineral processing projects, 49 of 62 cement projects, 16 of 27 thermal power projects and a lot of traffic projects.

The pace of construction at those projects is slow while the quality of equipment is bad, Thu said.

Can Tho proposes all-around cooperation with countries

The Mekong delta city of Can Tho looks forward to working with countries around the world on a wide range of areas, said Chairman of the municipal People’s Committee Le Hung Dung.

At his working session in the city on July 4 with chief representatives of Vietnamese diplomatic agencies overseas who undertake their mission from 2014-2017, he suggested engagements with Russia in trade, investment, energy, and transfer of hi-technology in agriculture.

As for France, he proposed working together in health care, education, transport and aviation.

He expressed hope for stronger links across metallurgy, engineering, chemicals, textile and oil refinery with Belgium.

As Vietnam’s major trading partner in garment, seafood, footwear and rice, the US is also the target of the city, he said.

The Chairman also sought two-way connections in information technology and architecture with the UK, and foodstuff and seafood with countries in Central and South Asia.

On behalf of the delegation, its head Nguyen Thanh Son said they will do their best to help Can Tho facilitate trade with countries worldwide.

New domestic shipping route launched

A domestic shipping route connecting northern province of Quang Ninh and central province of Quang Binh was officially opened on July 6.

Addressing the opening ceremony in Hai Phong city, Deputy Minister of Transport Nguyen Van Cong highlighted the new domestic shipping route would help solving high inventories at sea ports. This shipping route would also aim to reduce the dominance of road transportation in the freight market, contributing to rationally restructure the Vietnam ’s freight market.

The shipping route will help transport goods via local ports of Quang Ninh, Hai Phong, Thai Binh, Nam Dinh, Ninh Binh, Thanh Hoa, Nghe An, Ha Tinh and Quang Binh provinces.

According to Marine Department Director Nguyen Nhat, the inventory level at Hai Phong, Nghe An and Ha Tinh ports increased meanwhile the number of ships docked in some other ports were also high. Nhat also said average monthly, about 500,000- 600,000 tonnes of goods were transported among Quảng Ninh, Hai Phong, Thai Binh, Nam Dinh, Ninh Binh,Thanh Hoa, Nghe An, Ha Tinh và Quang Binh provinces. For distance from Quang Ninh to Quang Binh, sea transportation would take three times longer than the road transportation did but freight charges by sea were just one- fifth or one-sixth of the charges by road.

The new route would also help transporting super long and super heavy goods from northern provinces to central provinces, Nhat added.

In the time to come, the Ministry of Transport will consider to open many new domestic shipping routes to reduce the dominance of road transportation, decrease transportation cost and contribute to developing marine economy at localities./

Vinatex pins hope on IPO

The Vietnam National Textile and Garment Group (Vinatex) is completing final steps for its Initial Public Offering (IPO) scheduled for July 22 at the Ho Chi Minh Stock Exchange with great hope for a breakthrough in its development following equitisation.

Vinatex will be the first State-owned group to be equitised, with the State still holding a majority stake (51 percent), according to Le Tien Truong, the group’s Vice Director General. He added that when market conditions permit, shares held by the State will continue to be sold with the aim of gradually reducing the State stake to under 51 percent. At the same time, the group will issue more share to raise its charter capital.

The Ministry of Industry and Trade has valued Vinatex at 4,840 billion VND (more than 234.4 million USD), of which 4,300 billion VND is State-owned. The group will raise its charter capital to 5,000 billion VND (more than 238 million USD) after equitisation, through the issuance of a total of 500 million shares, each worth 10,000 VND. The State will hold 255 million shares, while 120 million shares will be sold to the group’s strategic partner. Of the remaining shares, 3,000,850 will be sold to the group’s employees and 121,999,150 shares will be put on auction.

Analysts say Vinatex shares will be attractive to investors, as the garment sector has good development prospects at least until 2030, particularly when Vietnam is on the way to sign a series of Free Trade Agreements (FTAs) and the Trans-Pacific Partnership (TPP). The sector has also enjoyed a wave of foreign investment in recent years.

Vice Director General Truong said while TPP prompts the garment sector to seek domestic suppliers, the equitisation of Vinatex will help the sector move in the right direction, thus bringing true value to the economy.

Statistics show Vinatex produced 111,800 tonnes of yarns, 161.4 million metres of cloth, 210 million pieces of garment in 2013, earning 2.9 billion USD from exports and 1,760 billion VND (83.8 million USD) in pre-tax profit.

In the first six months of this year, the group earned 1.62 billion USD from exports and 11,000 billion VND (523.8 million USD) from domestic sales. Vinatex has set the goal of raising the local content in its products to 60 percent in 2015 and export value to 5 billion USD before 2020.-

HNX raises 20 trillion VND in Government bonds

The Hanoi Stock Exchange held 14 auctions and raised 20 trillion (952.3 million USD) in Government bonds in June, increasing by 27.3 per cent over the previous month.

The yield of two-year bonds was between 5.64 and 5.75 percent per year, of three-year bonds between 6.1 and 6.25 per cent and of five-year bonds between 7.15 and 7.23 per cent. The yields of ten-year and 15-year bonds were respectively at 8.7 per cent and 8.88 per cent a year.

In the secondary market, the total trading volume of Government bonds under outright transactions reached 561 million bonds worth 54.8 trillion VND (2.57 billion USD) in June. More than 213 bonds worth 22 trillion VND (1.04 billion USD) were traded under the repurchase agreement.

Work to upgrade Bac Ninh-Hai Duong section starts

Work to upgrade a section of national highway 38 running through the northern provinces of Bac Ninh and Hai Duong started in the former locality on July 6.

The Build-Operate-Transfer project was invested by Vinaconex, Import company and Licogi 16 at a cost of nearly 1.7 trillion VND (80.9 million USD).

Once completed by the second quarter of 2016, the 32.8km road will accommodate four lanes, making it easier to link traffic among industrial parks, seaports and airports in the two provinces.

Deputy Prime Minister Hoang Trung Hai asked Bac Ninh and Hai Duong authorities to provide fair compensation for displaced households, so as to ensure that the project meets schedule.-

Da Nang tourism promoted in Ho Chi Minh City

The Department of Culture, Sports and Tourism of central Da Nang city held a programme in Ho Chi Minh City on July 4 to promote MICE (Meetings, Incentives, Conventions, Exhibitions) tourism and introduce its promotion packages there.

During the event, Ho Chi Minh City’s travel companies were introduced to the central locality’s favourable conditions in infrastructure and technology to serve the MICE, a specific form of business tourism that relates to the activities of groups of businesspersons travelling for business purposes and represents a multi-million- dollar segment of tourism worldwide.

Da Nang is home to an international airport with eight domestic routes and 20 international ones, an international seaport which welcomes 700,000 arrivals each year, and 337 accommodation facilities, including 10 five-star and nine four-star hotels and resorts.

The department’s deputy head Tran Chi Cuong said that Da Nang has focused on developing its infrastructure and improving the quality of its tourism products and services in order to ensure a safe and friendly environment for visitors.

In 2014, besides Ho Chi Minh City, the central city will also continue promoting its image to Hanoi and several foreign countries, including Japan, the Republic of Korea, Russia and Thailand.

In the first half of this year, it saw more than 1.7 million tourist arrivals, up 15.8 percent from the same period last year. Of this, the number of foreigners topped 450,600, a year-on-year rise of 15.7 percent.-

Affected firm assisted to access foreign currency loans

Enterprises affected by extremists who took advantage of the recent anti-China rallies to destroy and loot their property will be assisted in their access to foreign currency loans for the import of machinery and equipment in order to restore their production.

A document to this effect was released by the State Bank of Vietnam on July 4, which says the Governor of the central bank has agreed in principle for credit organisations and branches of foreign banks to consider the loans.

Basing themselves on the request for the loans from the enterprises, those organisations and branch will report to the bank for consideration in line with an earlier document on foreign currency loans.

The disturbances in some localities erupted during workers’ rallies against China ’s illegal placement of its oil rig Haiyang Shiyou – 981 in Vietnam ’s continental shelf and exclusive economic zone from early May.

Some extremists incited others to destroy and loot the property of foreign firms, as well as some national businesses and individuals, and acted against law enforcement officials, disrupting social order and business activities.

Authorities have arrested and tried hundreds of rioters.-

Ministry urged to keep public debt under strict control

Deputy Prime Minister Vu Van Ninh has asked the Ministry of Finance to keep public debt under strict control even though it is still within the safe limit, adding that the use of loans must be closely managed in order to achieve the highest efficiency.

Addressing the ministry’s conference in Hanoi on July 4 to review its performance in the January-June period and set tasks for the second half of the year, the Deputy PM instructed that the sector review the budget estimates for 2014 and make forecast on possible financial resources that can be mobilized when necessary.

In addition, the ministry should make recommendations to the government and local authorities in drafting out response plans for emergencies and in expanding economic and trade relations.

Deputy PM Ninh also required the ministry to intensify inspection of the implementation of financial policies and regulations as well as market and price management.

Finance Minister Dinh Tien Dung said the ministry will continue to coordinate with other ministries and localities to remove difficulties for production and business activities, and at the same time accelerate administrative procedure reform as well as the modernisation of tax and customs management work.

He affirmed that the tax and customs will strive to exceed the target on budget revenues for this year.

Regarding State budget spending, the ministry will focus on speeding up the disbursement of development investment and the settlement of debts in capital construction, while ensuring funding for major socio-economic tasks.

The restructuring of the economy, particularly the re-arrangement of State-owned enterprises, the stock market and insurance companies is also a top task for the remaining months of the year.

Statistics from the ministry showed that State budget collection and spending were estimated at 413.6 trillion VND (19.3 billion USD) and 492.4 trillion VND (23.1 billion USD), respectively in the first six months of this year. The figures represent respective rises of 15.8 percent and 8.8 percent year-on-year.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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